India and Pakistan: A tale of two economies

Ankit Mittal has a nice article comparing India and Pakistan economies historically. The younger lot may not know but there was a time when Pakistan had better economic and social indicators. Infact as Mittal shows, there is very little to seperate between the two countries.

In the end it all boiled down to institutions in the two countries. In India, they were bent but did not break down. Though in Pakistan this was not the case:

policy details aside, this stylized cycle of well-intentioned state-led development, to visceral populism, to corrective reforms, to the economic set-up of the present day has been very similar for both India and Pakistan. So perhaps economic historians should focus less on individuals and leaders, for ideas have a force of their own and economic development frameworks seem to work as fads.

Moreover, the different outcomes for the two neighbours makes it clear that the quality of Indian institutions and their ability to bend but not break under the weight of social divisions and instability have had a much more decisive role in determining our fortunes.